Power cuts impact steel production

Manufacturing production in the metals and engineering sector saw a one percent seasonally-adjusted decline between October and November this year due to electricity disruptions by Eskom, the Steel and Engineering Industries Federation of SA (Seifsa) said on Monday.

Seifsa chief economist Henk Langenhoven said that the cumulative effect of the production disruptions during 2014 now amounted to a 2.5 percent contraction in the first 11 months of 2014 compared to the same period in 2013.

This brought about a 12-month decline of 2.1 percent of production.

Over a 12-month period, the more electricity-intensive sub-industries experienced notable losses, said Langenhoven.

He claimed that production of rubber products went down by 5.9

percent, while plastics went down by two percent.

Basic iron and steel decreased by 0.9 percent while non-ferrous products went down by 3.6 percent.

Structural steel went down by 6.3 percent while general purpose machinery went down by 13 percent. Electrical machinery and equipment went down by 1.9 percent.

Langenhoven reiterated Seifsa’s previous estimate that electricity disruptions (under certain assumptions) as seen in November had the potential to wipe out 23 percent of production in the steel and engineering sector.

“The warnings from Eskom regarding the possibility of such occurrences during the year are of huge concern,” he said.

“The actual November production numbers are better than expected, but if the situation repeats itself during 2015, the calculations may prove ominously close to reality,” he said.